Tag: Inflation

Apple shuts Russia online shore

blue-appleDrastic fluctuations in the value of the Russian rouble has led Apple to shut down its online store in the country.

The reason is pricing for its products.  The rouble has fell in value by over 20 percent this week, and it continues to be in freefall, losing value today.

Apple moved to increase its prices by 20 percent but now feels that the currency is fluctuating so much it has to suspend trading.

Russia is suffering from a combination of sanctions imposed on it because of Ukraine, and because the price of oil is in freefall too.

Russia’s primary export is oil and gas.

Apple did not say when or if it would open its online store in Russia.  Earlier this week the Russian state bank put up interest rates to 17 percent, prompting fears of a recession in the country during 2015.

Inflation fell in January

David CameronThe Office of National Statistics (ONS) said that inflation in the UK fell to 1.9 percent in January.

But if you measure inflation using the Retail Prices index, it rose to 2.8 percent in January from 2.7 percent in December 2012.

The ONS said that inflation fell because furniture, alcohol and tobacco prices along with recreational goods and services fell. Prime minister David Cameron (pictured) welcomed the news.

In other UK business news, the British Retail Consortium (BRC) called for an overhaul of business rates. The BRC said shops’ business rates should be based on energy use and the creation of jobs.

The BRC described the existing system as outdated and cimbersome.  The UK government plans to release a report later this year to discuss the matter.

Fruit and veg saves UK’s bacon

David CameronInflation in the UK fell to two percent in December 2013 – hitting the Bank of England’s target for the rate.

The Office for National Statistics released the data today and said that the prices of food, including fruit and veg and bacon had slowed down their inflationary trend.

But while food has saved the Bank of England’s bacon, fuel prices rose in December.

Prime minister David Cameron expressed his delight at the news and claimed that as the economy grew and more jobs came into existence, that meant more security for people lucky enough to have jobs.

The news is bad news for savers though – because it means the Bank of England is unlikely to raise interest rates any time real soon now.

Bank of England says economy is on the up

churchillLower unemployment figures and a drop in inflation have led the Governor of the Bank of England to saw the UK economy will growth this year and next year.

Interest rates won’t be increased until unemployment falls to seven percent or below, Mark Carney said.

Growth in the UK is now likely to be 1.6 percent, slightly up from the 1.4 percent forecast. And Carney said annual growth could reach 2.8 percent, rather than the 2.5 percent the Bank predicted earlier this year.

In the quarterly inflation report, the Bank said that “recovery has finally taken hold. The economy is growing robustly.. thawing credit conditions start to unlock pent-up demand.”

Carney said that although house prices are showing signs of inflation, there did not yet seem to be evidence for a British property bubble.

KPMG: Retail is recovering

highstreetThe KPMG/Ipsos run Retail Think Tank believes the UK’s retail sector is on the road to improvement and has overall steadied in the second quarter.

Demand increased particularly in the end of June, positively impacting sales of goods. Three key segments, demand, margin and cost, which drive growth, were neutral, with demand slightly increased compared to the first quarter, margins still under some pressure, but with cost factors “largely negligible”.

The RTT’s Retail Health Index was marked at 78 points, one up from the previous quarter and the first successive growth since a continued decline in early 2011.

The group pointed to the arrival of the new governor of the Bank of England, Mark Carney, who said interest rates will stay low and should not mess with economic recovery.

David McCurquodale, head of retail at KMPG UK, said the picture is much brighter than last year.
“Compared to the carnage that occurred in 2012, this year we are seeing a far more settled picture which is a welcome sign for the retail industry,” McCurquodale said. “Certainly, there is less gloom, and expectations that retailers will enter into administration are lower, but for those sitting on large debts, there is still inevitably a risk of insolvency.”

Inflation rate approaches three percent

poundsThe Consumer price index (CPI) inflation rate grew to 2.9 percent in June, an increase on May’s 2.7 percent, the Office for National Statistics has announced – approaching the Bank of England’s cut-off point of three percent.

Slower rises in food prices and air fare managed to keep the lid on the inflation rate, which was expected because of increases in clothing and petrol prices from the same time last year.

Prices in clothing and footwear fell by 1.9 percent between May and June 2013 – much less than the 4.2 percent fall the same time lastyear, which was the largest on record. Transport prices rose 0.1 percent between May and June, compared with a fall of 0.5 percent for the same period last year.

Petrol prices rose by 1.0 pence per litre, compared with a 4.3 pence decline last year. Diesel was also up, but air fares fell 2.8 percent compared with a 7.4 percent rise in 2012.

The largest downward effects came from food and non-alcoholic beverages, with prices dropping 0.5 percent compared to a small fall of 0.1 percent last year. Recreation & culture saw prices drop 0.2 percent compared to 0.1 percent the previous year, with the main effect coming from package holidays.

The pound fell three quarters of a cent compared to the dollar at roughly $1.506, the BBC reports.

Berenberg Bank analyst Rob Wood told auntie that inflation is “likely to bobble around three percent for the next few months before heading down towards the two percent target next year, as weak wage growth feeds through to lower costs and inflation”.

But chief economist at the British Chambers of Commerce, David Kern, said there is uncertainty whether inflation will peak before falling later this year, as expected.

“If this happens it is still possible that the recovery will continue to slowly gather momentum throughout the year and into 2014,” he said, adding that unexpected developments like surges in energy prices could push inflation. This would mean “our growth prospects will face new risks”, he said.

The Bank of England’s target is to keep CPI around the two percent mark. If CPI pushes past three percent, governor Mark Carney must speak with chancellor George Osborne.

Inflation unchanged. It’s a record

nippergonerConsumer price inflation was unchanged for the fourth month in the row this January, according to data from the Office for National Statistics, making it the longest period of no change since records began in 1996.

The ONS said a price boost in alcohol and tobacco was the main factor sending prices up, while there were slower rises for clothing and footwear. The latter rose 0.2 percent year on year, and were a 5.4 percent drop compared to the previous month.

Alcohol and tobacco prices were up nearly 10 percent – at 8.5 percent – year on year, and were also up an enormous 4.3 percent from the previous month as Christmas discounts wound up.

For miscellaneous goods and services, prices were down 0.7 percent compared to December.

The ONS’ Phil Gooding told the BBC that there were some other factors worth paying attention to. Utility price rises haven’t entered the index yet, asserting that there will be more to come – which will have an uptick on the figures.

“We also have to watch out for oil prices,” Gooding said. “These have been failling for four or five months but in January they started to rise again”.

Pressure on high street retail could also have a downward effect, Gooding said.

While salaries are largely frozen and unemployment figures are still drastically high, consumers are struggling to buy – which would put money back into the economy. Investec economist Victoria Clarke told the BBC that the “squeeze on real spending power remains very much in place” – but, some recent small increases in employment have put a bandaid on an otherwise worrying problem.